The government launched on March 29 a fund to tackle Korea’s household debt problem, which has been regarded as one of the economy’s main weaknesses. The fund, dubbed the ‘National Happiness Fund’, aims to relieve the debt burden of the low- and middle-income classes.

Those eligible for debt restructuring are individuals who were overdue on loan payments by six months or more as of February 28 and whose total debt is less than 100 million won. Depending on the applicant’s age, income and overdue period, liabilities will be cut by up to 50 percent and will be required to pay off over up to 10 years. The fund will also be used to help reduce student loan delinquencies and convert high-interest loans to bank loans with lower borrowing costs and longer maturities.

* Source : Ministry of Strategy and Finance and Korea Development Institute, Economic Bulletin Vol.35 No.4 (April 2013).
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